- 8 -
assets by the following amounts: $885,712, $1,583,164,
$5,101,295, $9,045,475.
Petitioner deducted $763,869, $3,354,061, $3,667,803, and
$3,514,267 as interest in its consolidated Federal income tax
returns for taxable years ending September 30, 1990, through
September 30, 1993, respectively. In the notice of deficiency,
respondent disallowed these interest deductions in total.
For the reasons stated below, we agree with respondent that
there are genuine issues of material fact in the instant case and
consequently will deny petitioner's motion for partial summary
judgment.
Section 163 provides that there shall be allowed as a
deduction all interest paid or accrued within the taxable year on
indebtedness. In order to be deductible, interest must be paid
on genuine indebtedness. Knetsch v. United States, 364 U.S. 361
(1960).
The "all events" test governs whether an accrual of an
expense, including interest, is proper. See United States v.
General Dynamics Corp., 481 U.S. 239, 242 (1987). Section
461(h)(4) describes the “all events” test as follows:
All events test.--For purposes of this subsection, the
all events test is met with respect to any item if all
events have occurred which determine the fact of
liability and the amount of such liability can be
determined with reasonable accuracy.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011